COMPANY NEWS

COMPANY NEWS; Visa Assists Group Fighting Rival's Fees

AP

Published: April 27, 1991

BOSTON, April 26—
Visa International said today that it had agreed to pay for legal advice for a group of restaurant owners who revolted against the American Express Company's credit card fees, but Visa denied instigating the rebellion.

The announcement followed a report that the Federal Trade Commission was investigating the threat by about 100 restaurants in the Boston area to drop the American Express card if the company did not lower its commissions.

The developments came one day after American Express agreed to lower its rates effective June 1 and the leaders of the group announced they would continue accepting the card.

But American Express expressed surprise by Visa's move to pay legal fees. "I'm in a state of shock here," said Larry Kurlander, an American Express senior vice president. "For them to go ahead and hire outside lawyers with our merchants is really shocking."

Gregory Holmes, spokesman for Visa U.S.A., said that Visa had nothing to do with the revolt. "The decision by the restaurants to express their dissatisfaction was entirely their own," he said.

Mr. Holmes said Visa had suggested the group hire a law firm and agreed to pay for legal advice so the restaurant owners "were assured their actions were in accordance with the law." He said Visa had not paid any legal bills yet.

The leaders of the revolt -- Steve DiFillippo, owner of three Davio's restaurants, and Charles Ellis, marketing director for Grill 23 & Bar -- called off the revolt Thursday because of American Express's new rate structure.

Timothy Lynch, operations director at Grill 23, disclosed that Visa in late March retained a Boston law firm, Hale & Dorr, to provide advice to the group. Visa said the restaurateurs had told the company they lacked the means of retaining a firm on their own.

Under the agreement with American Express, rates will fall to about 2.95 percent from 3.25 percent for businesses processing about $1 million worth of bills through American Express annually. A restaurant doing about $10 million in American Express business would pay 2.8 percent in commissions, down from 3.25 percent. American Express also agreed to campaign aggressively in Boston, Washington and New York to get customers to eat out more often.